Mercuria Energy Group Ltd., a commodities trader, made a contract with a Turkish provider last summer to buy $36 million of copper. However, when the cargoes arrived in China, all they discovered were containers full of painted rocks.
The saga unfolds like a gangland drama, with the Swiss trading house claiming shipment theft as a suspect. Around 6,000 tons of blister copper in over 300 containers were replaced with jagged paving stones spray-painted to mimic the semi-refined metal before the journey from a port near Istanbul to China even began.
Also, where monitoring and inspection procedures are in operation, commodity traders are vulnerable to fraud, as this bizarre case demonstrates.
In connection with the fake copper system, Turkish police arrested 13 people. Mercuria, one of the world’s top five independent oil traders, is suing Bietsan, the copper provider, in both Turkish courts and U.K. arbitration case. It’s also submitted a formal criminal case with Turkish police and authorities, accusing them of cargo substitution and insurance theft, and it’s up to them to find out who’s to blame.
Several phone calls to Bietsan’s Tekirdag offices went unanswered.
“Suspects have been taken under custody who are thought to be involved in the various parts of this organized crime against Mercuria,” the Geneva-based Mercuria said in a written statement, thanking the Istanbul Financial Crimes Agency.
Judicial records, interviews, and news media accounts were used to tie together the case.
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According to Sinan Borovali, the trading house’s Turkish counsel, Mercuria decided to purchase copper from Bietsan, a Turkish dealer with whom it had previously done business. Copper seems to have been loaded into the first shipment of containers before being inspected by a third party. The containers were then affixed with seals to deter theft.
However, it is suspected that the containers were opened in the dark and the copper replaced with paving stones, according to Borovali of Istanbul law firm KYB. In order to avoid detection, the fraudsters alternated between false and genuine container seals.
The same thing happened every few days as ships left the Marport terminal in the port of Ambarli: the copper was quietly unloaded at night and replaced with painted rocks. Borovali explained, “This is how they did it.”
According to records given to Turkish investigators by Mercuria, the commodities trader charged $36 million in five installments while the vessels were at sea, with the final payment made on Aug. 20, 2020. The scam was uncovered later that month when the ships started docking in the Chinese port of Lianyungang. The eight ships were on their way to China at the time.